Leasider writes about Canadian finance giant

adminFebruary 1, 2015

Leaside writer Beth Parker has published a new book called Unstoppable, about a little-known Canadian finance system.

We asked her about it. Her reply:

It’s the business history of an entire industry called the asset-based finance industry, which is the second biggest lender in Canada to business next to the banks/credit unions. So it includes hundreds of companies in Canada, like General Electric, Canadian Pacific, all the major banks, all the car companies (their financing divisions), large manufacturers like John Deere, technology companies like IBM.

It started when the country needed to finance the railroads (and our conservative banks wouldn’t loan them the money) and evolved from there as Canada’s manufacturing and industrial sector grew post World War II.

Asset-based financing allows a company to “buy” the equipment it needs by means of a lease, and then pay the money back as they make money by using that equipment. It’s a $300 billion industry in Canada (each year).

To quote from the opening paragraph of the book,

“Take a look out at the highway; take a look at the trucks, trailers and cars passing by. Now ask yourself: What’s in those trucks? The appliances, equipment, machine parts, vehicles, computers, network systems, microchips…. The leasing industry finances so much outside the financial world that people don’t realize, and through the decades it has become part of every industry and come to support every business.”

I interviewed 50 business leaders (many octogenarians) to piece together the story, which had never been told in Canada. This included vice-presidents of all the banks, and past CEOs of companies like GE Capital, Canadian multi-billionaire Jim Pattison. One person I interviewed turned out to be a neighbour on Donegall Dr. (Doug McKenzie), who works in the global finance division of Bank of America in Canada. I’ve known him for many years as a friend but never knew until writing the book that he was part of the industry.

Sorry for the mini lecture. But this is actually interesting stuff. It is the good news about how companies (and economies) grow because someone has thought up a new idea, a piece of equipment or these days, new technology, and the asset-based finance industry makes the idea actually happen.